Durakon Reports Further Progress in First Quarter Results
30 April 1999
Durakon Reports Further Progress in First Quarter Results
* First quarter diluted net income per share increased 27% to $0.28.
* Operating income rose 16%, led by further improvement in the Towing &
Recovery segment.
-- Towing & Recovery: operating income doubled due to higher sales
and plant utilization.
-- Vehicle Accessories: planned engineering costs on a new program
reduced segment profitability.
Comparative First Quarter Highlights
(Amounts in thousands, except per share data.)
First Quarter Ended %
3/31/99 3/31/98 Change
Net Sales $45,321 $46,068 (2)%
Operating Income $2,708 $2,332 16%
Net Income $1,754 $1,361 29%
Net Income per Share (diluted) $0.28 $0.22 27%
Weighted Avg. Shares Outstanding
(diluted) 6,207 6,294 (1)%
Vehicle Accessories segment
-- Sales $20,228 $23,295 (13)%
-- Operating Income $1,717 $1,890 (9)%
Towing & Recovery segment
-- Sales $25,093 $22,773 10%
-- Operating Income $991 $442 124%
"Our first quarter growth in profitability is right on target with our
1999 plan and reflects a stronger Durakon. We've divested underperforming
operations, reduced our cost structure, strengthened our independent
distribution and have become an industry leader in quality and technology.
With these fundamental improvements in place, we are positioned for further
progress."
-- David W. Wright, President and Chief Executive Officer
LAPEER, Mich., April 30 -- Durakon Industries, Inc.
today announced stronger profitability in the first quarter
compared with a year ago, with a 27% increase in diluted net income per share.
This marks Durakon's fifth consecutive quarter of year-to-year profit
improvement.
Net income for the first quarter ended March 31, 1999, was $1.8 million or
$0.28 diluted net income per share, compared with net income of $1.4 million
or $0.22 diluted net income per share in last year's first quarter. Although
net sales decreased 2% to $45.3 million from last year's strong first quarter,
operating income rose 16% to $2.7 million due to greater overall
profitability.
The growth in Durakon's first quarter operating income was driven by a
solid performance in the Towing & Recovery segment. Towing & Recovery's sales
increased 10% on the strength of an expanded distribution base and new
products, which led to greater plant utilization and higher gross margin. As
a result, the segment's operating income rose 124% to $1.0 million.
In the Vehicle Accessories segment, sales decreased 13%, primarily due to
the impact of the 1998 divestiture of Duraliner USA and soft international
sales. Operating income decreased 9%, as higher gross margin was more than
offset by planned engineering costs related to a new OEM product program.
Even with the planned engineering costs, SG&A expenses decreased as first
quarter savings from the Duraliner USA divestiture continued on track.
"Durakon's 27% increase in diluted net income per share reflects our
continuing progress in profitability," said David W. Wright, President and
Chief Executive Officer of Durakon Industries, Inc. "Our Vehicle Accessories
segment is benefiting from a much leaner cost structure and our Towing &
Recovery segment is increasing plant utilization with its growth in sales."
Forward-Looking Statements
The discussion above contains forward-looking statements about the
company's future growth, profitability and competitive position. Any such
statements are subject to risks and uncertainties, including changes in
economic and market conditions, industry competition, the success of new
product introductions, the realization of expected economies from productivity
programs and plant expansions, management of growth and other factors outside
the company's control, including factors discussed from time to time in the
company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K. Readers are cautioned not to place undue reliance
on forward-looking statements, which reflect management's analysis only as of
the date hereof. The company undertakes no obligation to update these
forward-looking statements to reflect events or circumstances that may arise
after the date hereof or to reflect actual results.
Durakon Industries is the world's leading producer and marketer of pickup
truck bedliners, and is a leader in the production and marketing of rollback
car carriers and wheel-lift towing vehicles. Durakon's world headquarters and
a major manufacturing facility are in Lapeer, Mich. Other manufacturing
plants are in Greencastle, Penn.; Clinton, Tenn.; and Lerma, Mexico.
Durakon's common stock is traded on the Nasdaq Stock Market under the ticker
symbol DRKN.
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
Three months ended
March 31,
($ in 000's, except share data)
1999 1998
Net sales $45,321 $46,068
Cost of products sold 36,929 37,571
Gross profit 8,392 8,497
Selling, general and
administrative expenses 5,684 6,165
Operating income 2,708 2,332
Interest income, net 152 67
Other expense, net (19) (128)
Income before income taxes 2,841 2,271
Provision for income taxes 1,087 910
Net income $1,754 $1,361
Basic net income per share of common stock $0.29 $0.22
Diluted net income per share of common stock $0.28 $0.22
Weighted average basic shares 6,125 6,237
Weighted average diluted shares 6,207 6,294
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
($ in 000's) 1999 1998
ASSETS
Current assets:
Cash and equivalents $13,234 $15,433
Accounts receivable, less allowance
of $1,307 and $1,005 24,122 22,743
Inventories 18,970 16,177
Prepaid expenses and other 1,660 1,532
Deferred income taxes 1,685 1,685
Total current assets 59,671 57,570
Property, plant and equipment, net 19,372 19,945
Goodwill 9,793 9,923
Patents, net 127 139
Other assets 181 191
TOTAL ASSETS $89,144 $87,768
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $252 $271
Accounts payable 8,472 9,301
Other current liabilities 6,644 6,231
Total current liabilities 15,368 15,803
Long-term debt 771 801
Deferred income taxes 1,727 1,727
Minority interest 524 534
Total liabilities 18,390 18,865
Shareholders' equity:
Preferred stock, $1 par value -
100,000 shares authorized; none issued -- --
Common stock, without par value - 15,000,000
shares authorized; 6,125,200 and 6,125,200
shares issued and outstanding 16,059 16,059
Accumulated translation adjustment (300) (397)
Retained earnings 54,995 53,241
Total shareholders' equity 70,754 68,903
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $89,144 $87,768
DURAKON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
($ in 000's) 1999 1998
Cash flows from operating activities:
Net income $1,754 $1,361
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,364 1,479
Increase (decrease) in minority interest, net (10) 63
Net increase other assets 10 --
Net (increase) decrease in deferred income taxes -- 75
Increase (decrease) due to changes in operating
assets and liabilities:
Accounts receivable (1,379) 584
Inventories (2,793) (2,672)
Prepaid expenses and other current assets (128) 91
Accounts payable (829) (215)
Accrued expenses and other current liabilities 409 (158)
Net cash provided by operating activities (1,602) 608
Cash flows from (used in) investing activities:
Purchases of property, plant and equipment (646) (787)
Net cash used in investing activities (646) (787)
Cash flows from (used in) financing activities:
Repayment of long-term debt (49) (10)
Repurchase of common stock -- (357)
Net cash used in financing activities (49) (367)
Effect of exchange rate changes on cash 97 (31)
Cash and cash equivalents:
Increase (decrease) for the period (2,200) (577)
Balance, beginning of period 15,434 7,907
Balance, end of period $13,234 $7,330